Copper surges two percent

Copper rose 2 percent on Friday, as better-than-expected non-farm payrolls data from the United States supported hopes of an economic recovery and as efforts in Europe to contain the sovereign debt crisis drew some buyers back. Three-month copper on the London Metal Exchange (LME) closed at $7,375 a tonne from Thursday's close of $7,225, marking a third session of gains.
The metal used in power and construction hit a session high of $7,385 a tonne and was on track to record its biggest weekly gain since April, rising by almost 5 percent this week. Data from the United States showed that job creation accelerated more than expected in September, easing the risk of a new recession, although the economy still created too few positions to heal the labour market.
"The data was a positive surprise and confirms that the US economy is not going into a double-dip but the real risks continue to come from the European markets, which have been troubled by the sovereign debt crises," said Gianclaudio Torlizzi from metals consultancy T-Commodity.
The European Central Bank threw a lifeline to commercial banks, announcing on Thursday that it will provide longer-term cheap money for the growing number of European lenders which have seen wholesale funding dry up as market confidence ebbs. That spurred investors to buy back copper, which rose nearly 6 percent on Thursday in its biggest daily gain since early 2010, after it lost more than 25 percent in the third quarter.
The brittle state of the global economy has hammered copper on concern that demand for the industrial metal would drop. Copper, down some 23 percent this year, has fallen 28 percent from a record $10,190 touched in mid-February. Also supportive to prices was data showing copper stocks at LME warehouses falling 4,625 tonnes to 467,100 tonnes. Inventories are still about a third higher since last December.
More than 500 workers at a Chinese plant in Zambia went on strike demanding higher pay, just two weeks after a new president took office on the promise of improving mining conditions. Freeport McMoran Copper & Gold Inc however, is scaling up mining and milling output and concentrate sales at its giant Indonesian mine as more employees report for work, even as the union extended a pay strike by a month.
Copper's rebound this week happened at a time when top consumer China is off for a week-long public holiday, and traders say that suggests the rally might be short-lived. "Copper prices should recover from the late September sell-off in the fourth quarter and into 2012, supported by tight supply and restocking by Chinese consumers," ANZ said in a note. "But the market will continue to see significant headwinds from the uninspiring recovery in the US, moderating growth in China and renewed shocks in Europe."
Tin closed at $22,900 from $22,200 a tonne. A smelter ban on tin ingot exports in the world's largest refined tin exporter Indonesia is for the industry to resolve and does not require government intervention, a trade ministry official said. Aluminium ended at $2,228 from $2,230 a tonne and zinc at $1,920 from $1,867 a tonne. Battery material lead finished at $1,944 from $1,922 a tonne. Nickel closed at $18,910 from $18,950 a tonne.